Warsh's Fed Debut: Rates Held, Cut Language Gone
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Kevin Warsh, nominated by Trump in late January, oversees his first Fed policy meeting Wednesday, with bond markets watching closely for clues to his policy lean — UBS economist Jonathan Pingle called the press conference "pivotal" because "we do not really know what his policy views are."
- The Federal Reserve is widely expected to keep its key rate at about 3.6%, where it has sat since December, and drop language suggesting its next move will be a rate cut, with several policymakers saying a hike is more likely than a cut.
- Inflation has jumped to a three-year high of 4.2%, driven mostly by higher gas prices, making near-term rate cuts all but impossible and removing a key rationale for easing.
- The Fed's quarterly economic projections released Wednesday will likely show no rate changes in 2026 with maybe one or two cuts next year; Warsh has criticized the projections for providing too much "forward guidance" and may not submit his own forecasts — a potential signal he'll seek to eliminate them.
- Warsh's leadership style is expected to echo former Chair Alan Greenspan — fewer public speeches, more behind-closed-doors debate, and avoidance of hot-button issues like tariffs to limit friction with the White House.
- Trump told NBC's "Meet the Press" that Warsh is "fantastic" and can "do whatever he wants," but added "there's no reason to raise rates" — a stance that could set up a clash if Warsh keeps rates steady or hikes, as he suggested in his April confirmation hearing when he declared, "Inflation is a choice."
Why it matters: Warsh's debut signals a Fed likely to hold rates at 3.6% and abandon language about future cuts, dashing hopes for cheaper mortgages and auto loans. With inflation at 4.2% and several officials eyeing hikes, Warsh's anti-inflation stance — "Inflation is a choice" — sets up a potential collision with a president who wants lower rates but has so far publicly deferred to his new chair.
